Distribution Channel

分销渠道

Contents

Definition of distribution channel

Functions performed by distribution

channels

Channel-design decision

Channel-management decisions

Definition of channel of distribution

It is defined as the collection of organization units, either internal or external to the manufacturer, which performs the functions involved in product marketing.

Any organizational unit that performs one or more of the marketing functions is a member of the channel of distribution.

To successfully market its product, what should be done by a manufacturer?

Select the appropriate channel structure Control over the performance of functions Speed of delivery and communication The cost of operation

Choose the intermediaries to be used and establish policies regarding channel members

Devise information and control systems to ensure that performance objectives are met

Most distribution channels are loosely structured network of vertically aligned firms. The specific structure depends to a large extent on the nature of product and the firm’s target market.

Consumer goods channel & levels

Industrial goods channels & levels

Why are marketing intermediaries used?

Greater efficiency in making goods available to target markets.

Offer the firm more than it can achieve on its own through the intermediaries: Contacts Experience Specialization Scale of operation

Match supply and demand

Intermediary reduce the number of contacts

Decentralized versus centralized exchange

Intermediary reduces the cost of market contact

Channel behavior & conflict The channel will be most effective when:

Each member is assigned tasks it can do best. All members cooperate to attain overall channel goals and

satisfy the target market. When this doesn’t happen, conflict occurs:

Horizontal conflict occurs among firms at the same level of the channel.

Vertical conflict occurs between different levels of the same channel.

For the channel to perform well, conflict must be managed.

Channel design decisions

Intensive distribution: channel policy in which a manufacturer of a convenience product attempts to the market.

Selective distribution: channel policy which a firm chooses only a limited number of retailers to handle its product line.

Exclusive distribution: channel policy in which a firm grants exclusive rights to a single wholesaler or retailer to sell its products and a particular geographic area.

Channel management decisions